The new landmark California Supreme Court case, Dynamex Operations West, Inc. v. Charles Lee has dramatically changed the formulation for determining whether someone is an independent contractor or an employee. Plaintiffs in the case, delivery drivers for Dynamex, claimed that they were misclassified as independent contractors instead of employees.
The court abandoned the existing test for deciding a worker’s status, which included certain factors like whether a person could be fired without cause, who owned or provided the equipment used for work, and the amount of supervision and control. The Dynamex court now says that workers are considered employees if their job is part of the “usual course” of the business operations. In the Dynamex case, the court found that delivery drivers that worked for a delivery service were presumptively employees.
Once it is the determined that the workers’ job is part of the usual course of business operations, the employer must meet the elements of what is commonly referred to as the “ABC” test, a standard utilized in other jurisdictions to distinguish employees from independent contractors. Under this test, a worker is properly considered an independent contractor if the hiring entity establishes:
- That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
- That the worker performs work that is outside the usual course of the hiring entity’s business; and
- That the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.
This ruling will make it more difficult for companies to expediently label workers as independent contractors rather than employees. Additionally, the burden is now on the employer to overcome the presumption that someone who works for them is an independent contractor instead of an employee.
After reading this, do you feel you’ve been misclassified? Are you doing work which is in the “usual course” of the business but are being labeled an independent contractor? Let us help you figure out if you have a case. Contact us here.